Assessing financial feasibility and equity prospects in agrivoltaics: a case study of Hachinohe, Japan

Abstract

Agrivoltaics, which combines the use of land for both agriculture and photovoltaic energy production, is emerging as a promising solution to the land use conflicts between farming and renewable energy. By simultaneously boosting crop yields, enhancing solar panel efficiency and revitalising rural incomes, agrivoltaics is attracting farmers and solar developers, prompting innovation in technology and business models. Nevertheless, the key to scaling agrivoltaics depends on its commercial viability for different stakeholders, an area that still requires further exploration. To bridge this gap, this research examines the business model of an ongoing agrivoltaic project in the Hachinohe region of Aomori Prefecture, Japan, with a particular focus on financial feasibility and equitable distribution of benefits among stakeholders. The study applies multi-criteria decision-making method to assess the project’s overall financial feasibility using NPV, IRR, and payback periods, while also exploring the equity implications through Gini coefficients. Thereafter, a sensitivity analysis is conducted to offer policy suggestions such as revenue-sharing, better lease terms, and subsidies for farmers, with the purpose of enhancing rural economic revitalization and inform equitable business model design in Japan’s energy transition. Drawing on experiences from Europe and the United States, this research emphasizes the active engagement of farm owners in the development and implementation of agrivoltaic projects to enhance financial feasibility, equity and stakeholder participation.